Rules of The Road for Small Businesses
Running a small business is a lot like driving a car. There are many rules of the road. Operating a business in a challenged economy, facing increased competition and lack of focus can make it very difficult for owners to achieve their financial goals. Similar to driving, there are a lot of times when you have to stop and go, hit speed bumps, or feel stalled in traffic. Small business owners need to keep their focus and concentrate their efforts on the goal or destination.
1. Strategic Planning
Develop a business plan that will serve as a road map to navigate your business and identify your target markets. Tap into the tools available at the SCORE website, which features a variety of sample business plans for new and existing business. Managing your revenues and expenses will require a financial budget to stay on track.
2. Know Your Competition
You heard the driving technique of watching out for the other guy? Well, in business, you need to research the industry and the key players locally and nationally. What is their overall business model? Specialization in a niche market may distinguish your business from others. Active participation in industry trade associations can provide insights into your peers and best practices.
3. Sales Culture
It’s vital to keep your focus in on bringing in new clients and cross-selling to existing ones. Dedicate time specifically to sales activities each day to drive new business. Ask for client referrals from satisfied clients, and remember to thank your clients for their business. Make sure to go the extra step for your clients and give superior service. It is a lot like being a patient and courteous driver like remembering that pedestrians have the right away and when you come to a four-way stop at the same time as someone else, you yield to the car to your right.
Evolving your marketing to engage clients through social media will be critical for your branding efforts and new client acquisition. But remember, many states are hands free when it comes to cell phones and please don’t text and drive.
4. How to Measure Success with Defined Metrics
It’s important to track how effectively your business is operating and its overall profitability with defined metrics. Are your metrics in line with the overall industry or do you need a course of action to better achieve these key indicators? Certainly a customer relationship management system can be customized for reporting tools as well as client database management. An ongoing technology audit needs to be performed frequently. Does your business have the right tools to run efficiently to achieve desired results or do you need to rev-up some things?
5. Managing Cash Flow
Good management of working capital and liquid assets will determine the amount of cash needed to efficiently run a small business, at the lowest cost.
Things to focus on:
- Time and speed of daily cash collections
- Anticipated sales growth and expansion
- Negotiating favorable terms with suppliers
Questions to ask:
- What levels of cash will be necessary to run operations?
- Does my business need a line of credit to smooth out periods with delays in collecting funds?
- How do I finance longer term debt?
- Can leasing be another option?
Through online banking and merchant services, additional enhancements can be available to accelerate cash flow. A business owner will need to explore all low cost technology options to enhance overall cash collection. Given proposed changes to the United States Postal Services, next day mail services may not be available and certainly slow down incoming revenue. Just like driving on the highway, know what lane to be in and know when to change lanes to pass.
6. Professional Team
Developing a team and a network of trusted advisors to consult with including your banker, attorney, CPA, engineer and consultants will help to provide ongoing direction and support. Always be proactive and consult with your trusted advisors early for counsel.
Running a business in today’s economy is tougher than ever before. Business owners need to wear many hats and think about many things. As your driving your business the rule of the road is to stay focused. What other areas of your business do you need to focus on that we haven’t discussed?